Credit cards have been one of the greatest blessings for mankind. From providing cashless convenience for shopping to booking travel or holiday tickets over the internet, credit cards have impacted almost all spheres of our lives. Though it has been designed to simplify one’s life in many ways, a credit card can often cause financial damage by way of debts, if the user is not aware about the terms of usage of their card.
When it comes to credit cards, the choice must be made carefully, after careful evaluation of one’s need for it. When choosing a credit card, there are multiple factors which come into play. The most important of these is, the fees associated with the card. Every credit card comes attached with a sometimes advertised, sometimes not-so-well advertised gamut of fees and charges. Often, customers forget to pay attention to the fine print of the credit card usage terms, which more often than not, leads to them shelling out some extra bucks each month, towards some miscellaneous credit card related fees.
If you have ever noticed, your monthly credit card statement will not only have a principal fee amount, but also a bunch of other charges / fees, the purpose of which might not always be clear. So, in order to make more sense of your credit card bill, and as a consequence, save yourself from paying any unnecessary random fee, it is important to have some working knowledge about the different kinds of fees charged by your credit card provider or bank. Given below are some of the types of fees that you might find on your credit card statement and also, what it’s being charged for.
All of us have heard about Annual Fee. In credit card terms, annual fee is simply a fee charged by the credit card provider to allow you to use the card. It doesn’t matter if you use your card once in 6 months, or every week, you will still be required to pay for the convenience of owning and using a credit card. Annual fees for credit cards in the Philippines differs from bank to bank and from card to card. The basic range of annual fees charged for credit cards in Philippines is from PHP 500 to PHP 5,000. The difference is fee also depends on the level of your credit card – Platinum, Gold, Silver or Classic. The higher the level of the card, the more you might have to pay to own it. However, it is possible to get a waiver on your annual fees. For this, you may have to contact your bank, who can guide you better.
Cash Advance Fee
Cash Advance fee is a fee charged by the bank on card holders who have made a cash advance using their credit card. In simpler terms, the fee is levied on those users who have made a cash withdrawal using their credit card. Typically, banks charge a certain fee on any cash advance transaction, which may be a percentage of the cash advance amount or any specified minimum amount (whichever amount is higher). Do remember, cash advance fee charged on a credit card will be relatively higher than any other fee that is levied on your card, so do try to avoid making any withdrawals from your credit card, unless it is absolutely necessary.
Also Read: Credit Card Cash Advance – Do's and Dont's
It often happens, that before the month end is near, you have exhausted your allowance. You turn to the blessing, that is your credit card, to sustain you for the remainder of the month. And before you know it, all expenses are being put on your credit card, causing you to exceed your credit limit for the month. But even though you’ve maxed out your card, you still need to make some unavoidable payments, using your card. You can do so, despite having exceeded your credit limit for the month, but it will cost you. Over-The-Limit Fee, is the charge you pay to your credit card provider / bank for every transaction you make using your credit card, once you have exceeded your permissible monthly credit limit.
Late Payment Fee
Any late payment, whether it is EMIs or bills, will attract a penalty. In the case of credit cards, it is known as Late Payment fee, which is the charge levied on you by the bank if you fail to pay your credit card bill before its due date.. For instance, if you have failed to pay your due bill amount for March, the late payment fee will be added to the bill statement for the month of April. Typically, banks will charge a late payment fee which may either be a certain specified amount or could be a percentage of percentage of amount due for payment, whichever is more. Late payment fee can be easily avoided if you religiously keep track of your credit card payment dates and makes the payment on time.
Supplementary Card Fee
A supplementary card is an additional credit card, with almost the same benefits as the primary card, which can be obtained from the bank or credit card provider. Supplementary cards are linked to the same account as the primary card, allowing the holder to enjoy a similar range of benefits. Similar to primary cards, supplementary cards also carry an annual membership fee, levied on users for the convenience of using the said card. This is known as Supplementary fee, and is it usually much lesser than the fee charged from principal card holders.
Returned Check Fee
At the time of making your credit card payment, you are free to do so in a variety of methods, one of which is by giving a check. However, it often happens that the check issued might be returned by the bank for any reason like insufficient funds in the account, incorrect details, etc. In such cases, the bank or card provider will charge you a certain amount, known as Returned Check fee, for the inconvenience that the dishonored check has caused. Returned Check fee may is charged by banks at their discretion and may differ from one bank to the other.
Currency Conversion Fee
One of the common benefits offered by a credit card is that it allows you to make payment internationally as well. However, this benefit comes at a charge, known as the currency conversion fee or foreign transaction charge. Each time you use your credit card overseas to make a payment in another currency or use the card online to pay for something in a foreign currency, the bank levies a currency conversion charge not only for usage of the card, but also for converting those charges to other currencies.
Balance Transfer Fee
When you transfer your existing credit card debt from an existing account to a new account, the process is known as Balance Transfer. This way, you can not only seek the benefit of lower interest rates but also take advantage of better payment terms. Balance transfer can be beneficial to those who have an outstanding balance over a long term. However, for every balance transfer, the bank charges a Balance Transfer Fee which may be fixed at a specific percentage or at a flat rate.
Card Replacement Fee
It is not uncommon to lose one’s credit card. In such cases, banks have laid down a simple procedure which allows customers to apply for a fresh card. However, replacement of a lost or misplaced card is also chargeable. Banks charge what is known as a Card Replacement Fee for the issuance of a fresh card if your original card has been misplaced.
Credit cards have been invented to simplify our live. However, one must gather ample knowledge about the workings of one, like fine print of the terms and conditions of usage, limits, associated fees and charges. Though it might not be easy to keep track of all the fees and charges that are associated with a credit card, especially for those handling a credit card for the first time. However, armed with the knowledge about the same, you will not only be careful with the usage of your card but also avoid making payments of any unnecessary and easily avoidable charges.